Economics of War Come to Congressional Budgeting

The Republican Party is the home in America of more astute and insightful economic analysis and the grass roots level. This is growing more and more true as radio talk show hosts become better able to articulate the information. They manage to reduce complex ideas of reducing marginal tax rates creates increased family welfare down to the bumper sticker phrase, “It’s not your money, Senator!”

This same ability to reduce complex ideas down needs to go beyond Economics 101 concepts of guns versus butter or supply and demand. If we do not, we still end up fighting bad Democratic ideas like socialized medicine, spend-now-pay-later social security, etc., on terms that only the Democrats and “all politics is local” pork barrel politicians of both parties can win. Most of this can be accomplished by applying the principles of the dismal science of economics to conflict.


Pork and Islamic Terror
Will any pork barrel politician like being called out as the equivalent of an al-Qaeda terrorist? The politician is more motivated by his single issue pork barrel project than the common good. An al-Qaeda terrorist is more interested in pushing his single issue of Islamicistic domination than the common good of the world’s citizens.

In essays on the economics of war, one professor makes economics and war as much a part of his studies as the pricing of a loaf of bread. There is a demand curve and a supply. The supply is of wealth (i.e., booty or production for war and peace, respectively) versus the demand for conflict.

He claims that his analysis applies equally well for armed conflict or terrorist attacks as for Congressional budget fights. It seems true.

Not being the economist myself, I can only refer to his graphs and analysis for why some of the following points are true. However, common sense and a little observation of human nature bears these “maxims” out.

Because the return on investment is much greater, it is more economically efficient for a small group to push for its single issue than it is for the majority to oppose it. Think about it. A town needs a bridge. They convince their Congressman to get money for the bridge. The Congressman increases his campaign contributions from the townspeople and the benefiting businesses for himself and for his PAC to finance other candidates. He increases his re-election chances by pushing for the bridge. If the bridge is not paid for out of the federal budget, the Congressman gets a lot of good press at home. But if he succeeds in getting the bridge, he might even get his name on it. Then the town will never forget who its benefactor is. (Not much different than Alexandria, Egypt can never forget that it was founded by Alexander the Great nearly 2300 years ago.) If the Congressman has a child who wants to go into politics, the young politician will be able to milk that bridge for votes for generations.

The Congressman on the other side of the country might even vote for this bridge in a town he has never heard of, if he too gets to build something – say, library named after him in his hometown. (The Congressional equivalent of the Carnegie Library – who built those libraries, by the way?)

Now let’s turn to the terrorist. He is motivated to bring down a government. Very few in the community support him. Mao Tse Tung suggested that the terrorist could easily win with a small force. All he needed to do was be highly motivated and smart. So in Mao’s world, you attacked the population that you wished to persuade. As the police and army respond, they respond by repressing the population: restrictions on movement, increased security, reduction of rights to free speech, imposition of higher taxes to pay for more security for the ruler, etc. The population begins to resent the ruler for these impositions. The population begins to fear participating in society for fear of being hurt or killed by terrorist attacks. It is easier for the citizens to stay, not to participate in the economy, and to resent the government. The support for the terrorist grows and feeds into a new cycle of violence.

Both the terrorist and the Congressman feed off of systems that reward the instigator with greater returns than would come from more traditional efforts. Each of these is a highly predictable, economically efficient action for the desired goals.


How to Resolve the Dilemma?
Just because we understand the motivations, does not mean we as average citizens need to approve of that behavior. To overcome either self-centered manipulation of the economics of war, the economist will tell you is dependent on the ethos that permeates the particular society. Why do Republicans and Democrats who dislike each other not fight personal wars through duels, fight factional (see the Federalist Papers for application) wars through armed conflict, or tear apart the Constitution through outright treason and sedition when the minority party in Congress? Simple. The ethos of America does not find such actions acceptable. In Kentucky, the governor must swear at his inauguration that he has never fought a duel. These principled positions survive because the morality of the country requires it not because the law requires it. Law only functions when morality permits it.

Why is Afghanistan war-torn? Because the ethos created by conflict, escalated by the later intervention of the Soviet Union and the U.S.’s support of the opposition, did more to support single issue warlords than it did for civil government. Why is recovery going to be difficult? Warlords still have single issues to promote – themselves. Altruistic behavior and capitalistic commerce will occur in small doses, but only after the courage of the majority to resist warlords through armed conflict becomes strong enough will the warlords disappear.


The Solution of Political Morality
The only way to stop terrorist activity and pork barrel politics is by changing the moral culture that allows it. How? The bumper sticker could say, “Only criminals have pork barrels.” We need to define a moral principle that local funding should be done by states unless many states benefit. The Interstate System benefits all states. If I want to go to Denver from Indianapolis, I am happy to have an interstate through Kansas (even wiser a turnpike, but that is for a different day). If trucks on interstates are not the epitome of interstate commerce, I don’t know interstate commerce.

We need to raise the cost of single issue politics. Only when it is almost more expensive for single issues to win than it is for the majority to oppose will single issues truly die. The politics of theft by Congressional committee needs to be called what it is – criminal. Having worked with groups of people, I know that work only gets done when fewer than two people apply themselves. Groups slow down work. Yet groups are the only way that work can be broadcast. Oh, the paradox!

Controlling lobbying won’t work. Destroying Congressional staffing won’t work. Breaking down doors to executive sessions to committees won’t work.

I am frustrated because I can clearly describe the problem, but I don’t know how to solve for the law of economics in conflict.

In War in the Shadows, the author suggests that guerilla warfare (which terrorist rely on) can only be won by the larger (probably governmental body) group if the larger group abandons the idea that it must seize and hold all territory. The war must be won by establishing fortified areas where the warriors can retreat for recuperation and re-supply among the guerillas. Then the security perimeter can be expanded through cooperative, non-repressive efforts. The population must feel that the government is responsive and protective of the population.

I suggest that this is the way that pork barrel politics at the federal level must be fought. Attorney Greg Garrison has started his own fortified position in Indiana. He is calling out the Congressmen from Indiana on pork barrel politics. Now, I admit that to date most of his examples of pork barrel spending have focused on out-of-state expenditures. For his stronghold to be successful, he must focus on the local population. He needs to identify wasteful spending in Indiana that each Congressman directly benefited from. To attack Pence, the attack must be on spending in Muncie. To attack Carson, the spending must be in Indianapolis. Only when these attacks change the moral culture for voters toward their own Congressmen will the morality truly change.

National attacks on local expenditures is even less effective than local attacks on out-of-state expenditures. Single issue politics is the equivalent of terrorism and its techniques of guerilla warfare. They must be handle the same: so says the law of economics.

Republican for Raising Taxes

As the Indiana legislature and other states' legislatures are closing in on writing their budgets for this budget cycle, we are hearing the typical question of raising or lowering taxes. As with any debate written within the past sixty years, the language of the debate has traditionally been written and dictated by liberal democrats. This has allowed the Democrats to control the emotional response to the message.

As the conservative movement has been able to find its voice after the Reagan and Gingrich revolutions in the White House and House, respectively, it is slowly learning how to choose words that better reflect the true debate.

For example, the debate over estate taxes has been using the language favored by the Democrats. Admittedly Teddy Roosevelt, as I understand it, first pushed the estate tax for the purpose of preventing the super-wealthy of the era from creating a caste system of wealth. He wanted to prevent the Rockefellers and Vanderbilts from controlling America in perpetuity by the power of wealth. He made the faulty assumption that once wealth is created in America, it would stay in the same family forever. Who could argue that huge estates should remain in place forever? How anti-American!

He looked at the history of Europe and its historical wealth and assumed that the "Robber Barons" were accomplishing the same thing by different means. The Democrats of the New Deal thinking picked up the populist notion and ran with it for nearly a century. They kept pointing out how anti-American passing estates from one generation to the next were.

Then the Republicans of the conservative movement learned to change the vocabulary. This tax was imposed when a person died. Without that triggering event, no tax was "recognized" (lawyer word for the reason for a tax being owed). So they changed the debate from the tax on the wealthy (which no one in America feels that they are) to a tax on the dead. This gave the tax a bad taste, even for Democrats.

This change of vocabulary may have the feel of George Orwell's Winston Smith in the Ministry of Truth in1984. Changing the words changes the truth, right?

Never fear changing words if they move toward the truth.

The truth is, as I have pointed out in a previous posting, the estate tax is an optional tax that even Bill Gates can avoid. The tax is imposed on the dead uninformed.

Why not call it what it is the uninformed middle class death tax? Well, the Republicans came up with the shorter version: death tax. This changed the entire debate. Now Democrats had to explain why the name "death tax" was an inaccurate description. This opened an old debate subject to previously undiscovered information. The Democrats had a hard time selling a 55% tax rate on the dead. Add to this the last 25 year push for old people to retire on the wealth of their retirement plans rather than guaranteed income streams of pensions, and everyone could be taxed at death. The American dream of wealth for all, the death tax for all.
Even Hillary had to at least support changing the death tax system.

Let's get back to my point: the current budget debates.

The current debate about tax cuts makes the Republicans look stupid. Why "lower taxes" when huge expenditures for war are foreseeable into the future?

The Democrats have made complete mud of this debate, too. Let's pull the definition of words apart and examine this further. I looked up the word "tax." It means, "A contribution for the support of a government required of persons, groups, or businesses within the domain of that government." American Heritage® Dictionary of the English Language, 4th ed. (Houghton Mifflin Co. 2000). It can also be defined as "A charge, especially a pecuniary burden which is imposed by authority." Webster's Rev'd Unabridged Dictionary (MICRA, Inc. 1998). So a tax is the payment to the government and not the calculation method.

So if we look at history a tax cut occurs when the amount of money that a taxpayer pays to the government is reduced. Where do these tax cuts occur? Since the income tax is based on the amount of income a taxpayer has received that year, a tax cut would occur when the size of the check for the taxpayer is reduced. Lower income means bad times. Bad times occured in 1970's and early 1980's. This despite high tax rates. So the Democratic ideal of high tax rates lead to low taxes. The Democrats cut taxes and increased spending (which I knowingly assert without support and will address at a later date). For more information on high tax rates and lower taxes received by the government see the works of Dr. Thomas Sowell, Professor Walter Williams, or Professor Arthur Laffler.

The Democrats have pushed the Karl Marx notion that the best means of taxing a population is by taking for the wealthy and giving to the poor. (No, this is not Robin Hood. The Robin Hood story is based on taking money from the crooked despot King John. So crooked that even his lords found his taxes outrageous and demanded the King sign Magna Carta.)

Despite my respect for Karl Marx's descriptive talents, we ahve yet to find many of his proscriptive and theoretical solutions to work well at all. So maybe we should proactively call this fallacy of cutting tax rates is the equivalent of reducing the taxes flowing to the government.

Presidents Kenney and Reagan have proven that reducing taxes increase taxes.

Let's see the Republicans call a spade a spade: President Bush should call for increased taxes -- by reducing tax rates. By pushing the notion that he is trying to reduce taxes, he is perpetuating the fallacy that tax rates are an accurate proxy for taxes generated. They are not.

Let us destroy one more "fact" of the Orwellian Ministry of Truth. Republicans must raise taxes!!!